Review for Tuesday’s Exam

Financial Planning, Investment options, and Banking

3. What items do we place in a safe deposit box?

Birth certificate

Check and saving account details

Social Security

Passport

Copy of Will

Valuables

7. Why is the U.S. concerned with China over U.S. treasury securities?

China has bought over $1 trillion investment in American government debt, the world’s largest such holding. The Chinese are afraid that their investment might not keep its value. The U.S. wants China to invest in our debt, but understands that the value of the debt can change.

8. What is a bond?

“IOU”-”I owe you” note or certificate of indebtedness.

9. Why do banks, corporations, or the government need to raise money?

a. buy new equipment.

b. pay off debts

c. finance operations

13. What is a savings bond?

Securities issued by the US Treasury Department that funds the US Government tasks. Series EE bonds are offered at a deep discount and will mature at face value.

Gifts for baptism, births, and celebrations!

14. What is a zero coupon bond?

is a bond bought at a deep discount and it will be repaid at face value on the maturity date. No coupons are offered. Safe college investment!

15. What are mutual funds? Why are they considered less risky than investing in individual stocks?

 

They are a pool of money placed into a portfolio and run by a manager. Stocks, bonds, and other securities are included. The funds diversity makes it less risky.

16. What does a prospectus tell us?

Covers strategy, fees, manager, and performance

17. Why should you dollar cost average?

timing strategy of investing equal dollar amounts regularly over specific time periods. More shares are purchased when prices are low and fewer shares are purchased when prices are high.

18. Identify three reasons people do NOT bank.

Banks discriminate

Person moves often—seasonal work.

Doesn’t have a Social Security number.

19. What is a negative part of using a cashing check outfit?

Higher fees

No interest--savings

20. What problems do you have with overdraft?

There usually is $35 fee. when withdrawals from a bank account exceed available balance—you’re “overdrawn.”

21. What is the bounced check protection?

For a $6 dollar fee, banks set up a special account for you if you’re “overdrawn” This acts like a credit card.

22. What are the concerns when it comes to processing checks?

23. What are the fees associated with using an ATM card?

24. What are concerns with using a Debit card?

 25. How is a CD different from a basic savings rate?

 26. What are some convenient banking options?